Shell Petroleum profits plunges by 44 percent

Shell Petroleum profits plunges by 44 percent

Karachi (Wednesday, March 7, 2012): Shell Petroleum, which is second largest oil marketing company, has seen its profits dip in Pakistan by an amount of Rs906 million (or 44 percent) during the year 2011. The sudden plunges in
the profits are caused by the growing receivables that have restricted cash available with the oil marketing company.

The receivable from Government seems to be mounting thus the company is finding it hard to cope with the limited cash at their disposal. Sarim Sheikh, Chairman Shell Pakistan, has sent a post-result review the Karachi Stock Exchange
(KSE) describing the situation faced by the company.

The Government still owes Rs13.8 billion to Shell petroleum, on account of price differential claims, sales tax and petroleum development levy refunds. However during 2011, the company managed to recover a meagre amount of Rs1.2
billion, as opposed to the aforementioned amount.

Sheikh said that the companies’ foremost priority is the settlement of these remaining amounts. Sales grew by 11% to astounding Rs247.5 billion in the year ended December 31 but this did not help the firm’s bottom-line as profit
margins dropped.

Sheikh said that 2011 was a tough year for Shell, as there was high inflation, rising oil cost, heightened security concerns and growing cost of doing business. Operating costs almost doubled to Rs2.1 billion in 2011 as opposed
to Rs1.26 billion in 2010. Moreover, the cost of sale also rose 12% to Rs206.7 billion during the period under review.

The company did declare bonus shares in the proportion of one share for every four shares along with the result and spurred a rally at the stock market. The company’s stock surged Rs8.08 to close at Rs201.39 despite the overall
KSE’s benchmark 100-share index declining 79.39 points.

Pakistan State Oil (PSO), the largest Government owned Oil Company in Pakistan, witnessed the same trend, as their net profit during July to December 2011 took a nose dive and dropped by 36%.

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Posted by Wajahat Javed on Mar 8 2012. Filed under Business, Pakistan. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry